Stocks rose, completing the Standard
& Poor’s 500 Index’s recovery from the plunge that followed
Lehman Brothers Holdings Inc.’s collapse in 2008, and
commodities gained as U.S. retail sales and earnings forecasts
fueled optimism in the world’s largest economy.

The S&P 500 gained 0.6 percent to 1,254.60 at 4 p.m. in New
York, above its closing level on Sept. 12, 2008, the last
session before Lehman filed a record bankruptcy and intensified
the financial crisis. Copper, cotton and rubber rose to records.
The cost to insure Portuguese bonds against default climbed and
the euro erased gains after Moody’s Investors Service said the
nation’s bond rating may be cut.

The S&P 500 climbed for a fourth day as earnings forecasts
topped estimates at Adobe Systems Inc. and Jabil Circuit Inc.
and an industry report showed retail sales had their biggest
jump of the holiday season last week. European stocks climbed as
Chinese Vice Premier Wang Qishan said China “has taken steps to
help some EU members counter the sovereign-debt crisis.” China
holds $2.65 trillion in foreign-exchange reserves.

“Lehman is the poster child for the demise of the banking
industry,” said Michael Mullaney, who helps manage $9.5 billion
at Fiduciary Trust Co. in Boston. “We’ve recovered from that.
We’re comfortable with equities. If we do get a continuation of
the strength in the economy and corporate earnings, we could get
a reasonably good year for stocks in 2011.”

Korean Tensions

Stocks also climbed today as tensions on the Korean
peninsula appeared to cool. North Korea indicated a willingness
to avoid further confrontation with South Korea and resume talks
on its nuclear program, New Mexico Governor Bill Richardson said
today after an unofficial visit to the Communist country.

Financial shares rose after Toronto-Dominion Bank agreed to
buy Chrysler Financial Corp. from Cerberus Capital Management LP
for $6.3 billion in cash, adding an auto-finance company in its
second-largest purchase. Retailers climbed as the International
Council of Shopping Centers and Goldman Sachs Group Inc. said
same-store sales last week grew 4.2 percent from 2009.

Today’s advance came before government data tomorrow that
is forecast to show U.S. gross domestic product expanded at a
2.8 percent annual pace in the third quarter, quicker than the
2.5 percent estimate published last month, according to a
Bloomberg News survey of economists.

‘Increased Confidence’

“There’s increased confidence in what the future looks
like, at least in the U.S.,” said James Dunigan, chief
investment officer at PNC Wealth Management in Philadelphia,
which oversees $105 billion. “Corporate earnings and forecasts
are strong and the economic picture has improved. In the event
we don’t have any bad surprises from Europe, stocks will be the
investment of choice.”

The economic expansion starting in June 2009 has driven an
85 percent surge in the S&P 500 since it sank to a 12-year low
of 676.53 on March 9, 2009, restoring about $7 trillion of
equity value.

U.S. government and Federal Reserve spending to stimulate
the economy, coupled with improving profits, drove the rally in
equities. The index will end 2011 at 1,374, according to the
average projection of 11 strategists at Wall Street’s biggest
banks, producing the biggest three-year rally since 1997-2000.

European Stocks

More than four companies gained for each that fell in the
Stoxx Europe 600 Index, which climbed to its pre-Lehman level
yesterday. Mining companies led the advance, as Rio Tinto Group
jumped 2.6 percent and BHP Billiton Ltd. rallied 2.9 percent in
London. Royal DSM NV rose 3.9 percent after agreeing to buy
U.S.-based Martek Biosciences Corp. for $1.09 billion.

The MSCI Asia Pacific Index jumped 1 percent, while the
Shanghai Composite Index rallied for the first time in five
days, rising 1.8 percent after a survey showed property sales
increased in most Chinese cities during the past week.

The S&P GSCI index of 24 commodities climbed 0.6 percent to
the highest level since September 2008. Cotton futures jumped
3.2 percent to close at a record $1.5912 a pound on demand in
China, the world’s largest buyer of the fiber. Copper climbed as
much as 2 percent to $4.2895 a pound in New York, the highest
price for a most-active contract since at least December 1988,
and touched a record $9,392 a metric ton in London.

The euro weakened against 13 of 16 major counterparts,
losing 0.3 percent to a three-week low of $1.3095.

Moody’s said it may cut Portugal’s bond grade by one or two
levels, citing the economy’s “sluggish” growth outlook.

Portugal Concern

The yield on the Portuguese 10-year bond increased five
basis points to 6.75 percent, while the extra yield investors
demand to hold the securities instead of benchmark German bunds
rose for a third consecutive day, increasing five basis points
to 3.54 percentage points. Credit-default swaps on Portuguese
government debt rose 10.5 basis points to 486.5, the highest
level since Dec. 1, according to data provider CMA.

Ireland’s 10-year bond yield surged for a fourth day,
climbing 27 basis points to 9.12 percent for its second-highest
level of the month.

U.S. Treasuries fell, pushing the yield on the benchmark
10-year note yield up from near a one-week low, as the Fed
concluded its purchase of $7.79 billion of government notes.

Yields have risen about 1 percentage point from their 2010
low on speculation the U.S. extension of tax cuts will spur
economic growth and widen the budget deficit. The 10-year yield
was at 3.36 percent, up two basis points.